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Increased investment in design produces profit

Design consultancies are responsible for one quarter of all overseas earnings by the UK’s consultancy businesses, a groundbreaking new report claims.

Published yesterday, the report by the London Business School also reveals British manufacturing companies spend an estimated 10bn on product development and design. Across the economy as a whole, the report estimates design is a 12bn activity which employs 300 000 people.

And the report, from a study backed by the Design Council, estimates that by devoting an additional 1 per cent of turnover to design, manufacturers could raise their turnover and profits by up to 4 per cent over five years.

Design Council chief executive Andrew Summers says: “This report is highly significant. It provides the first comprehensive picture of the extent of design activity across the UK manufacturing industry.”

The report, written by Andrew Sentance and James Clarke of the London Business School and titled The Contribution of Design to the UK Economy, is based on 1995 figures. They suggest that design consultancies’ overseas earnings totalled 350m in that year.

But the report claims in-house product development and design appears to have a more positive impact on business growth than bought-in design. A Design Council spokesman says: “These figures need interpreting with care.” The report estimates that companies spend 4.3bn on in-house design and 5.7bn on bought-in design.

Other findings prove that spending on product development and design by UK industry exceeds the spending on research and development and is more widely spread across the industry than research and development.

Sentance says the report shows “that when UK business spends more on design, the benefits are felt not just in the investing firms but across the economy as a whole”.